Posts Tagged ‘June’

I’ve been hammering away at Turkey’s credit bubble problem for the past eight months: consumer lending is still growing at a nearly 30% annual rate, after dipping into the teens earlier this year (I am annualizing the 3-month growth rate). But the trade data just released for June show a slowing domestic economy.

With the economy clearly slowing, where are all the loans going? The answer is indicated by the extremely high interest rates charged by Turkish banks:

At 18% interest, consumers have to borrow to pay the interest on previous loans. In other words Turkish banks are capitalizing interest, and booking profits on loans that would go sour if they stopped lending additional money to borrowers to pay the interest. The much-vaunted strength of Turkey’s banks (whose stock prices recovered smartly this year) appears to be an illusion. The economic outlook isn’t good.

At first glance, newly released figures for Turkey’s foreign trade suggest the country’s economy is holding up well despite the travails of its neighbours in Europe.

But as ever the devil is in the detail and hidden away in the numbers are some more uncomfortable indications that darker days lie ahead for the Turkish economy.

Figures from TUIK, the statistics office, show a 30 per cent reduction in Turkey’s trade deficit, from $10.3bn in June 2011 to $7.2bn in June this year. Other figures from TIM, the Turkish exporters’ association, show exports for the 12 months to July reaching $142.6bn, a healthy 12.3 per cent up on the previous twelve months.

Taken together, the two sets of figures could suggest continued success for Turkey’s exporters, while Turkish consumers have reined in their love of expensive imported goods.

But dig a little deeper…

To begin with, according to TIM’s figures for July, Turkish exports for the month actually fell by 5.5 per cent over July 2011 while both TIM and TUIK show worrying falls in exports to Turkey’s core European markets.

According to TUIK, Turkey’s exports to the EU dropped from 48.2 per cent of the total in June 2011 to only 37.1 per cent this year. TIM’s data suggest a drop from 47.7 per cent in July last year to 40.3 per cent.

According to TIM, the bulk of the fall came in two keys sectors: automotive, which saw exports in July plunge 22.3 per cent; and ready-to-wear textiles, where exports in July fell by 12 per cent.

While the two organisations collate their figures in different ways the outlook is clear: as Europe continues to sneeze, Turkey will catch a cold.

The picture is more worrying when the effect of the weakening euro is taken into account, an effect which economy minister Zafer Caglayan estimates cost the country $550m in July alone.

So far so bad. But according to Ozgur Altug, chief economist at Istanbul’s BCG Partners, the real bad news is hidden not in weakening export figures but in the falling import figures – which helped contribute to fall in the trade deficit and to a reduction Turkey’s current account deficit from $77bn a year ago to $67bn by the end of May this year.

Altug points out that Turkey’s dependence on imported energy remains the chief culprit behind its current account deficit woes. “Despite falling oil prices, the 12 month rolling energy balance rose to $51.4bn by the end of June this year, compared with $47.8 at the end of 2011,” he says. “The government has been successful in rebalancing the economy but the structural problems such as the growing need for imported energy are still there”.

Altug warns that an improvement in the non-energy trade deficit is also illusory. He points to an 11 per cent drop in imports of intermediate goods over the first half of this year and a 16 per cent drop in consumer goods over the same period.

Both, he suggests, are a direct result of slower GDP growth, with the former suggesting a drop in imports of capital goods used to expand output, the latter indicting declining consumer confidence. The root problem, he suggests, is Turkey’s failure to capitalise on years of rapid economic expansion to increase the contribution of exports to the overall economy.

The Israeli Interior Ministry reports a dramatic drop in the number of illegal infiltrators for the first half of July.

Only 140 illegal infiltrators were able to enter Israel from the Sinai, and all were arresteed.

In June, 1213 illegal infiltrators crossed the border, of whom, 928 were arrested.

And that number was just half of the 2031 who entered illegally from the Sinai in the month of May.

By next week, 200 kilometers of border fence will be completed along the Sinai-Israel border, and by October all but 14 kilometers near Eilat will be completed, and that segment will be completed in 2013.

I had the tremendous zechut to attend the wedding of my granddaughter Rachayli Fuchs to Shaul Klein in June, and then, much to my delight I was able to make one of the Sheva Berachot. My guest list was composed and invitations extended. The divrei Torah would be delivered by my grandson Rabbi Raphael Fuchs and my nephew Meir Greenwald.

Where to hold the Sheva Berachot? For me it was an easy decision. Orchidea, of course.

This was not the first time I would be making Sheva Berachot at Orchidea, located in Boro Park, Brooklyn. Based on past performance I had every reason to expect it would be wonderful – and it was.

Orchidea is a dairy restaurant, which I felt was a nice break from all the meat meals at the weeklong festivities.

I couldn’t bring flowers from the wedding because too many days had passed, so hosts Ofer Kohen and Mazal Werczberger had beautiful candle displays on each table. There was a menu created especially for us at each seat, giving guests an enticing selection of courses and making for a nice keepsake.

I am not a fan of sushi but most of my guests were, and the large sushi platter soon disappeared, though at the same time waiters were serving hors devoir. My favorite was the avocado salad on tortilla chips; my sister liked the coconut crusted fish on the skewer.

The grilled salmon at Orchidea is outstanding – an opinion shared by everyone who ordered it – but those who ordered the pasta dish or the eggplant felt the same way about their choices. The dessert, composed of cheesecake, chocolate cake, ice cream and napoleon, all arranged on the same plate, was a work of art in addition to being a culinary delight.

Getting together with good friends gives one a very special feeling. Being together for a mitzvah such as Sheva Berachot makes the occasion even more special. Add the divrei Torah, the beautiful words of the chattan, seeing the happiness on the face of a beloved granddaughter and hearing the magnificent voice of my chazzan, Pinchas Cohen, as he sang the last berachah – put all of that into Orchidea and it is no wonder the evening was one that will long be remembered.

(For more information on Orchidea, see The Jewish Press Dining Guide in this issue.)

Increasing numbers of Muslims in Europe are travelling to Afghanistan, Pakistan, Somalia and other conflict zones to obtain training in terrorist methods.

Although intelligence agencies have been following the trend since the July 2005 bombings of the London commuter system, which were perpetrated by four home-grown Islamic terrorists, the scale of the problem has come into greater focus in recent weeks.

European security officials are especially concerned about reports that al-Qaeda is recruiting and training Western operatives who have “clean” criminal records and have the ability to travel freely and blend in with European and American cultures.

In Norway, for example, an ethnic Norwegian convert to militant Islam who has received terrorist training from al-Qaeda’s offshoot in Yemen, is awaiting orders to carry out an attack on the West, officials from three European security agencies said on June 25.

European officials have confirmed that the man is “operational,” meaning he has completed his training and is about to receive a target. Although the terrorist-in-waiting is believed to still be in Yemen, even if he is found he cannot be extradited: under Norwegian law it is not a crime to attend a terrorist training camp.

The London-based newspaper Sunday Times, quoting intelligence services, published a story on July 1 that said the Norwegian jihadist had been trained by Al-Qaeda in the Arabian Peninsula [AQAP] to evade airport security and is plotting to hijack an American passenger plane and, in a suicide mission, crash it. The newspaper portrayed the plot as an attack on the upcoming London Olympics, to be held from July 27 to August 12, but said the target was specifically supposed to be an American aircraft.

The paper described the recruit as being a Norwegian citizen in his 30s, with no immigrant background, but who calls himself Abu Abdulrahman. The man, who converted to Islam in 2008, has apparently in recent months been undergoing training at AQAP bases in Yemen.

According to a detailed report in the Norwegian newspaper Dagbladet, on July 5, the individual is a 33-year-old Norwegian who, in his youth, was associated with Oslo’s far-left Blitz movement. Despite his one-time radical credentials, he later worked as a babysitter at a daycare center in Oslo, the city where he was born and raised. He did not have a history of violence, the paper said.

Dagbladet went on to report that eventually he became a member of the Green Party; a source close to the suspect said that, after the terrorist attacks on September 11, 2001, he had come to be viewed as an easily-influenced conspiracy theorist.

His ideological priorities shifted, according to the paper, after he married the daughter of a diplomat from an unspecified North African country. In 2008, he converted to Islam and underwent a change of lifestyle: he gave up alcohol and broke off almost all contact with his earlier friends. The newspaper stated that he recently became a father, and that his wife had travelled to her home country with their child.

Jonathan Evans, the head of MI5, Britain’s domestic security service, recently provided important context to the threat posed by would-be jihadists. In a rare public address on June 25, Evans said the Olympic Games in London “present an attractive target for our enemies and they will be at the center of the world’s attention in a month or so. No doubt some terrorist networks have thought about whether they could pull off an attack.”

“In back rooms and in cars and on the streets of this country there is no shortage of individuals talking about wanting to mount terrorist attacks here,” Evans continued. “It is essential that we maintain pressure on al-Qaeda.”

Evans also said that al-Qaeda militants are using the countries which toppled their leaders in the Arab Spring as bases to train radical Western youths for potential attacks on Britain: “This is the completion of a cycle. Al-Qaida first moved to Afghanistan in the 1990s due to pressure in their Arab countries of origin. They moved on to Pakistan after the fall of the Taliban. And now some are heading home to the Arab world again.”

“Today,” Evans added, “parts of the Arab world have once more become a permissive environment for al-Qaeda. A small number of British would-be jihadis are also making their way to Arab countries to seek training and opportunities for militant activity, as they do in Somalia and Yemen. Some will return to the UK and pose a threat here. This is a new and worrying development and could get worse.”

On July 9th, after an intensive investigation, Jerusalem Police arrested two Arabs, aged seventeen and eighteen, suspected of starting fires around the main entrance to Jerusalem two weeks ago. The Police announced that the two have admitted the arson, explaining that their actions were motivated by nationalistic causes. They started the fires by throwing Molotov cocktails, which were discovered at the point of initiation of the blaze. Seventy five acres of forests were consumed. Another ten Arabs have been arrested so far on similar charges.

Several recent fires which have blazed across Israel, especially in the Jerusalem vicinity, are believed to be the work of Arab arsonists who are methodically setting fire to natural brush and thicket in attempt to cause injury and damage to property. The fires also cause traffic congestion on main highways which have to be closed, causing backups for many hours and shutting down main routes between major cities in Israel. In some cases, residents are evacuated due to fear that their homes may be burned.

The Jerusalem Fire Department reports that two hundred fires have been extinguished since the beginning of the summer. Most of them have been determined to be caused by arson.

On June 28th, Arabs set fire to fields at Eish Kodesh, in Benyamin. Aharon Katsof, Eish Kodesh spokesman, told Tazpit News Agency that the residents noticed smoke coming from the Wadi below their community. The community’s RRT (Rapid Response Team) identified two suspects fleeing the scene towards the Arab village of Cursah. Half an acre of barley was destroyed, causing immense financial loss to the field owner. Two months ago, two acres of vineyards were destroyed by fires at Eish Kodesh. After the incident, IDF trackers found the trail of two men leading to Cursah.

On June 25th the home of Yiskah and Elyasaf Orbach at Chavat Gilad was severely damaged by fires started by Arabs. Beny Katsover, head of the Shomron Communities Council, responded to the arson, saying: “The time has come for the Government of Israel to renew its policy of deterrence against Arab vandals by destroying their homes, alongside the expansion of the Jewish communities. Our enemies will understand that they are achieving the opposite of their actions.”

You’d think they could wait until America has decided if we really intend to be post-American. I mean, what’s President Obama going to do about Iran and Syria – get Qatar to bomb them? Does that really require a regional-war-scale response from Russia? And what about the South China Sea? It’s not like our new Marine contingent in Australia can do anything about China’s strong-arming of the other nations there. Nor does there seem to be much likelihood that we will react to Russia’s chest-thumping in the disputed Kuril Islands north of Japan. And when I say “react,” I mean “react at all.” For all the president’s new focus on the Pacific, we don’t seem to have any positions we intend to actually enunciate there, much less defend.

The Tumultus Post-Americanus is now well underway. The US and NATO, and our Pacific allies Japan, South Korea, Australia, Thailand, and the Philippines, have tremendous latent power, but the American leadership to focus this power for strategic purposes has gone missing. There is no initiative on our collective part – we have done nothing but react in the last three years – and possibly even less appreciation of how the world is changing. The forms of international discourse – the processes of the UN, the G-8 and G-20, the IMF – are being adhered to now because they are a convenience, not because they produce anything useful. They are brittle relics of a peace that no longer has a core and is waiting to be breached by regional initiative.

Hiatus, for now

My sense today is that nothing is about to “break.” I believe those who sense otherwise misread the dynamics of the current situation. There is no unified actor – either a nation or a movement; e.g., Islamism – in a position today to prosecute an abruptly transformative, offensive campaign on the model of predatory Marxist-Leninism or the outright-conquest methods of Adolf Hitler. The nations of today all know this – even Iran’s mullahs.

Russia and China are both acting under the compulsions of their traditional geopolitical motives; as important as American power is in their calculations, they are at least as concerned about each other. They cannot escape their neighborhood. Right now, Russia’s actions are, to the Russian mind, wholly defensive. China hopes to enlarge her base of invulnerable power by controlling the sea- and tradeways around her perimeter, and staking out power outposts in Central and South Asia and Africa. China sees a watershed opportunity; Russia sees a loss of stasis and a rise of Islamism, and seeks to prepare for whatever that’s going to do to her, in part by reclaiming territory she feels vulnerable and disrespected without (e.g., Georgia).

The decisive factor for political Islam – Islam focused through the lens of ideology on politics and the nation-state – is still its internal competition. Saudi Arabia and Iran have led separate factions for decades. But now an economically and militarily resurgent Turkey is seeking to put her own stamp on Islamist geopolitical leadership. And Egypt – a very large, populous, and educated nation, long held in a neutral stance by Mubarak’s effectively secular regime – appears to have entered the sweepstakes with the election of Mohammed Morsi. Some Western pundits are waiting for the Egyptian military to drop the hammer on Morsi, but I am not sanguine about that possibility. Erdogan’s Turkey, where the traditionally moderating political power of the military has been broken in the last 3-4 years, looms as an example to the region. It will take some time, as it has in Turkey, but Egypt will probably emerge as a nation-state competitor to Turkey, and she is likely to do it by emulating Erdogan’s methods.

The Muslim Brotherhood itself is boresighted on Jerusalem, but the path to that “victory” remains uncertain. Egypt, for all her geographic advantages, may not be the most obvious launching pad. Syria, which has been in Iran’s orbit for a long time, is a great strategic prize in the race to Jerusalem, both geographically and politically. Most political happenings in the Middle East right now are centered on the jockeying process for leadership of the Islamist geopolitical movement.

No one in this mix is ready right now for the fading global stasis to entirely fall apart. It serves their interests for the stasis to continue and hold their competitors in check. But within the constraints of the old stasis, they – especially Russia and China, but also India, Iran, and other affected nations – are making military preparations.

Forty-five years after the Six Day War, declassified transcripts of the Israeli cabinet and government committee meetings in the days after war that ended on June 10, 1967 were released this June. The documents provide a breathtaking insight into the efforts of Israeli leaders to reach a peace settlement with the countries and groups which had been at war with Israel. The evidence of the hard work and the varied opinions on the part of the Israeli ministers, all eager to reach a peace treaty and an understanding with the Palestinians and Arab states, presents a revealing contrast to the long-term refusal of the Arab parties to come to the negotiating table — an attitude that was reiterated at the summit meeting of the Arab League on September 1, 1967 in Khartoum, Sudan. As has now been revalidated by the declassified transcripts, the Israelis were ready to negotiate land for peace; the Arab leaders instead issued their statement of the three “nos:” no peace with Israel, no recognition of Israel, no negotiations with Israel — an unconditionally negative position taken by Arab leaders that still persists.

The Arab and Palestinian intransigence – the refusal to accept a peace agreement – has a long history and is all too familiar. In 1922 the League of Nations Mandate for Palestine was officially established. Under it a Jewish Agency, set up in 1929, and composed of representatives of world Jewry, would assist the British administration in establishing the Jewish National Home in Palestine. The Jewish Agency then organized an infrastructure of political and social institutions that became the basis for the state of Israel. The Arabs refused the offer to create a similar Agency.

In 1922 the Arab leaders who refused to participate with the Jews in any plan or in a joint legislature, in which anyone other than the Arabs would have been the majority; rejected the proposal for a Palestinian Constitution with a Legislative Council in which the Arabs would have formed the majority, and boycotted the election for the Council.

In 1937 the Arab Higher Committee rejected the idea of two states, first officially proposed by the British Peel Commission Report. The Report had recommended a Jewish state in about 20 percent of Palestine, about 5,000 square kilometers, while most of the rest was to be under Arab sovereignty. The Report also suggested a transfer of land and an exchange of population between the two states. The Peel Commission Report was accepted, in principle, by the Jewish Agency, even though it meant that the Jewish state would be a small one, but it was totally rejected by the Arab Higher Committee, which called for a single state in all of Palestine.

In 1939, in the last attempt before World War II, to reach some agreement, the British Colonial Secretary organized a Round Table Conference in London that February. Failure was inevitable: the representatives of the five Arab states and the Arabs in Mandatory Palestine who were present refused any direct contact or discussion with the Jewish representatives — even to sit in the same room with them.

The Arabs also refused to accept United Nations General Assembly Resolution 181(II) of November 29, 1947, which adopted the recommendation of the UN Special Committee on Palestine (UNSCOP) that Western Palestine — the area outside of Jordan — be partitioned into two states, one Jewish, one Arab, with an internationalized Jerusalem as a corpus separatum, or separate body. The Jewish state would have about 55 percent of the area, but not the historic areas of Judea and Samaria. The Resolution was accepted by the Jewish leaders, but rejected by the Palestinian Arabs and by six of the seven member states — Jordan being the exception — of the Arab League, which at that time had replaced the League of Arab States.

Arab refusal to enter into peace negotiations persists to this day, inflexible as ever. The Palestinians decline to enter into negotiations with Israel unless Israel first accepts the “pre-1967 borders” (borders that have never existed; they are merely the armistice line of where the fighting stopped in 1949), agrees to Jerusalem as the capital of a Palestinian state, and ends all construction in areas acquired by Israel as a result of the 1967 war.